Direction Still Up: Clouds Forming? November 16, 2019

Nov. 15, 2019 – Make no mistake, the direction of the US markets remain “Up”, but . . . . storm clouds may be forming. Two signs of that are the percent of “Smart & Dumb money” (from SentimentTrader. Com) and my own sentiment composite (top pane, chart below). The difference between “Smart & Dumb Money” is fairly high indicator of where market tops happen. That does not mean “all Hell is breaking loose”, but it does raise the caution flag. The “big guys” are cautious.

Note just how far & fast this market has come in the 6 weeks. Due for a change or at least a pause? I’m certainly thinking that is a strong possibility. It’s just natural. I also note that price action “Price Strength” is back to Neutral. Time to Sell? No, but not a great time to buy either. Let’s continue to monitor the reaction of the market to any news, whether it be earnings, geo-political or the like. That will be a clue. Trade news is going to be a key item here. Right now we’re being whip-sawed back and forth on that front. There is a big incentive to inflate these market over the next year (i.e. election); watch the big picture carefully. (click on chart to enlarge)

Short term, here’s where the sector action is:

That’s about it for now. I’m in there with significant positions, but getting more uncomfortable as this market pushes higher. Watch volume spikes on big move days. Also be aware of “Lack of Demand” (low volume), especially over multiple days.